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SEC charges immigration attorneys with defrauding investors seeking US residency

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The Securities and Exchange Commission (SEC) has charged a Los Angeles-based immigration attorney, his wife and his partner with conducting an investment scheme to defraud foreign investors trying to come to the US through the EB-5 Immigrant Investor Programme.

The SEC alleges that Justin Moongyu Lee, along with Rebecca Taewon Lee and Thomas Edward Kent, raised nearly USD11.5 million from two dozen investors seeking to participate in the EB-5 programme, which provides immigrants an opportunity to apply for US residency by investing in a domestic project to create jobs for US workers. 
 
The Lees and Kent informed investors that they would be EB-5 eligible if they invested in an ethanol production plant they would build and operate in Ulysses, Kansas.  However, investors’ money was misappropriated for other uses instead of the ethanol plant project.  The plant was never built and the promised jobs never created, yet the Lees and Kent continued to misrepresent to investors that the project was ongoing.
 
In a parallel action, the US Attorney’s Office for the Central District of California announced criminal charges against Justin Lee.
 
“These immigration lawyers exploited a desire by foreign investors to participate in a program that would not only generate them a positive investment return, but also provide them a path to legal residency in the United States,” says Michele Wein Layne, regional director of the SEC’s Los Angeles office.  “Long after all construction had ceased, they continued to falsely tell investors that they were building the plant.”
 
According to the SEC’s complaint, the investors defrauded by the Lees and Kent were primarily of Chinese and Korean descent.  Justin Lee and Kent applied to the US Citizenship and Immigration Services (USCIS) in 2006 for designation as a “regional centre” under the EB-5 programme.  They claimed there would be “substantial economic benefit” and “thousands” of new jobs for this area in southwest Kansas.  However, by mid-2008, construction of an ethanol plant at the site was no longer economically feasible, and the Lees and Kent concealed their failure to generate the jobs required by the EB-5 programme by submitting false documents to the USCIS. 
 
When Justin Lee was running low on cash and having difficulty obtaining financing, he took money out of investor escrow accounts without their knowledge prior to the approval of an investor’s application for residency.  Lee and his wife subsequently misused several million dollars raised from the ethanol plant investors for other undisclosed purposes such as financing an iron ore project in the Philippines and repaying investors in other unrelated offerings. 
 
According to the SEC’s complaint, the Lees set up investor seminars in Los Angeles at which the purported ethanol plant project was the main part of the presentation despite the halt of construction in 2008.  Kent, who visited the site frequently in 2008 and 2009 and knew no construction was taking place, also participated in the seminars.  Investors continued to be misled that the proceeds from their investment were being used to construct an ethanol plant.  In particular, the business plan updated in June 2010 and distributed to investors falsely represented that construction was “ongoing” and the plant would be in operation before November 2011.

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